Employee Refuses to Sign Salary Slip Counterfoil – What Are My Options?

As the accounts manager and administrator, I would like to know what to do if an employee refuses to sign on the counterfoil of the salary slip. We have a procedure that a salary slip is given, and a counterfoil of the salary slip must be signed by the employee as it is required in our accounts and by our auditors.

The employee refuses to sign and says that he does not need the salary slip and will also not sign on the counter salary slip. What steps or legal actions can be taken?

You need not take any legal steps for this kind of minor misconduct, but just note in the counterfoil that the employee refused to collect the payslip or refused to sign on the counterfoil. That is enough for the auditors. Even the Labour Department will not question it if they find a remark like this.

Regards,
Madhu.T.K

You can just tell the employee that from next month onwards, he won't be receiving the salary, and he can submit his resignation. RULES ARE RULES. I don't think there is any reason for him to say, "I don't want a payslip, and I won't sign." When he is asked to sign, he should do so without making an issue, as other employees have done. This is too much. Please take care of such troublemakers.

If salary is directly deposited into the bank account of the employee, is it compulsory to obtain a signature on the counterfoil? Can't we simply show them the bank statement?

With warm regards,
Trupti

A salary slip has a definitive purpose and can be used more effectively for loans, presentations to other employers, etc. A bank statement is also legal, but it is not the right way. A salary slip will show the breakup of the salary and deductions. This is very important for the accounts of the company as well as necessary for the employee.

Regards,
Viren

Thank you for the reply. We provide salary slips to our employees but do not take their acknowledgment (signature) stating that they have received the salary slips from us. We also maintain a copy of the salary slip in the register. What I wanted to know is if acknowledgment is compulsory, or can we show the bank statement to the concerned authorities who come for audit or inspection.

Regards,
Trupti

In the general course of operation, a salary slip has to be issued to an employee to provide a definite idea of his/her earnings, deductions, etc. In smaller organizations, it is often overlooked and given minor significance.

Importance of Salary Slips in Large Establishments

In large manufacturing establishments or factories (those falling within the ambit of Model Standing Orders), there is usually a separate section under HR that deals with this. They have to keep records in the prescribed format as per the Factories Act. For various inspections like EPF, PF, ESIC, Professional Tax, Labour Welfare Fund, Yearly Bonuses, etc., the respective competent authorities or inspectors may demand payrolls for the inspection period for their scrutiny.

Mandatory Record Keeping for Income Tax and TDS

For income tax calculations and the deduction of TDS from employees, an establishment has to keep a record of employees' earnings details across the concerned financial year. In view of this, not only issuing the employees with their payslips but also keeping the payroll records and preserving them across years is mandatory.

Regards,
Arun Dixit

Providing a salary slip is essential to understand the details of paydays, verify the accuracy of the salary prepared, review deductions, and ascertain the net salary received. It is not mandatory for the employee to sign the counterfoil. If the employee declines to sign, there is no need to be concerned. Simply explain that it is a standard practice for everyone to sign, and encourage the employee to comply. If the employee still refuses, it is best to let it go. No action can be taken in such circumstances as it ultimately depends on the individual's choice to accept the slip or not.

Regards,
D. Gurumurthy
LL, HR & IR Consultant

Thank you. However, we are not concerned about whether he takes the salary slip with him or not. But he should sign the salary slip that is kept in the company. This is required by the auditors and also as per labor rules. So, in such a case, what action can be taken against such an employee?

Regards,
Viren

Well, there is no legal requirement, no legal punishment, and no harsh steps to stop payment or resignation. Bank documentation supports your account. At most, you can have documentation to inform your seniors that he is not signing. Do not give importance to such a minor issue.

Keep yourself away from the idea of taking action against him for his attitude. Just because he is not signing the payslip, the auditor will not raise a query. If they say the payslips are prepared and given to all, your duty is to have the payslip. Showing that you are doing so is enough.

A salary slip is a record that proves the employer has paid the employee the Minimum House Rent Allowance. In Maharashtra, there is a separate enactment. The salary slip can be a record to be maintained under this act.

Regards,
Mangesh Wakodkar
Aurangabad